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Sunday, November 9, 2014

Marketing Shift from Firm to Consumer

Venkatesh KG | Great Lakes Institute Of Management, Chennai

Marketing is shifting from mass communication to individual, one to one interaction with the integration of various digital technologies like SMAC. Also marketing strategy is shifting from product push to customer pull strategy. Digital marketing is picking up fast and intense market research is being resorted to by companies on their products to understand customers’ preferences and sentiments before targeting/positioning their products and services. Companies have started having their webpage in various social media platforms and are advertising via social media to reach to a wider segment of customers. Content management has become a crucial aspect in social media marketing as it is the content which delivers the right message to the end users. The number of competitors in each industry is increasing and each is following a different marketing strategy like

differentiated pricing, adding unique features to their products, providing value added services and positioning their products after evaluating the existing trends, expectations and assessing the distinct features in their competitors’ products and services. There are several instances where the strategy/market position has increased the brand proposition and a few of them have gone wrong

disrupting the performance of their brand in the market. I would like to cite a few specimen cases indicating the diverse issues involved:

Food & FMCG domain:

• McDonalds had never introduced vegetarian options in any nation. To cater to the Indian market, they have introduced vegetarian novelties like Alootiki/ paneer tikki burgers and maintain separate kitchen for veg and nonveg food

• Pizza Hut have customised their pizza to Indian market by introducing Indianised flavours like Tandoori paneer and paneer makhni amongst others

• Cornflakes is thinner in foreign nations than in India as foreigners have the tradition of consuming flakes with cold milk but in India, we consume with hot milk.Thinner cornflakes were getting reduced to porridge when mixed with hot milk. So they had to introduce thicker cornflakes in India

• Cadbury Dairy Milk was targeting only youth earlier. But when they positioned their product as a family product by engaging the popular Amitabh Bachchan in their advertisements, sales increased by more than 5%

• Chick shampoo of Cavincare targeted rural market by introducing sachets black in colour, having less quantity of shampoo to meet and satisfy and suite rural people’s sentiments and requirements

• Apple pricing strategy is skimming followed by penentration. They initially price their products high to target the set of customers who are willing to pay high and get the gadget at the earliest. The moment a new version is released, the previous version of the product cost is re-duced to target customers who are interested in purchasing their product at a lower price.

• News feed in social media is so designed such that customers get news feed on the products and services based on customers’ internet search history.

• In FMCG sector, companies package their products differently for rural and urban markets. For Rural markets, they target sales with smaller packaging and bright colours, while for urban markets,

they come up with larger packets in sober colours.

Retail domain:

• Many players have come up with customer centric loyalty program, membership cards and competitive pricing strategy to enhance their market share

• Based on earlier purchase patterns of customers for specific categories of products, select customers often get email and SMS alerts on special offers on their historically preferred products using SMAC technology

• The product line-up in modern retail outlets are so designed to keep the essential items at the far end of the row so as to offer better visibility for optional products to end customers

Other Industries:

• Nike, Airtel and Dell have introduced an interactive portal allowing their customers to customise their orders according to their respective requirements

• Ericsson, when introduced its high-priced mobile phone in India during 1990s, it targeted the upper class folk by having their advertisement telecasted in a Five Star hotel favoured and frequented by the elite, also the ads had a classy look

As observed, products and services are becoming more and more customer-centric out of mandatory needs and necessities and the products are shifting from mass production to customised production to cater to individual customers’ choices. However there are instances where the strategies opted by some of them didn’t work because of improper assessment of customers’ choices and needs and insufficient marketing research.

• Tata Nano priced at just rupees one lakh and equipped with all the basic features required for a car, they positioned it as the cheapest car in the world. This hurt the ego of the purchasing people and many of them were unwilling to purchase.So Tata could not achieve their targeted sales figure. Tata Motors, post the initial setback, has decided to upgrade the features and are now positioning it as an Ideal urban car.

• McDonald’s “When the U.S. Wins, You win”: McDonald’s came out with a campaign to increase sales that if US wins in 1984 Olympics, the customers would win a “food item”. Gold medal meant Big Mac, silver medal meant fries and bronze a Coke. Soviet Union boycotted it that year, and the U.S. took home 174 medals, including 83 gold leading to unprecedented outgo of freebees. The result indicated that one should not strategize in an entity where the end-result is un-predictable

• New blue coke: Because of high competition in the cola industry, Coke introduced sweeter blue coloured coke. However higher sweetness and blue colour associated with the edible items was not welcomed by customers. The reason for the failure was presumably portfolio misfit

• Toilet to Tap: This deals with innovative waste-water recycling in Orange Country, California. Though this project was successful in providing water for irrigational purpose, it was not successful in drinking water segment though it was advertised as the President of the nation drinking this water. This was attributed to the psychological factor, the “yuck’ factor” among the people.

Now many companies have started bringing customers into their organization to explain them the stories and also establishing customer advice panel for providing ongoing inputs for new product or service development.

Takeaway:

• Once the product has matured, proper action has to be taken to assess and cater to the latent needs of customers and differentiation has to be conveyed properly

• Sufficient time and money has to be invested on market research to understand the changing customer sentiments. It has to be done not only at one place, but across the target geographical locations. Based on favourable responses, new products can be launched, or existing products redesigned

• The products have to be marketed in such a way that by purchasing or using it the ego of consumers is not hit

• Customers now are relatively better informed and educated on products and services than before, due to the advent of technology and advertisements. Proper planning is vital and has to be done while developing new products so that the promised services match and excel the services provided by competitors

A customer-centric strategy can enable companies to understand the changing customer needs and the price customers are willing to pay, and consistently deliver on their promise to customers

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